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Posted by Dick Adams on June 6, 2007, 4:39 pm
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My youngest, Joshua the Mercenary, is now 16, has a part-time
job. He is already cursing the IRS. With a smile on my face,
I told him it is Congress, not the IRS, with whom he should
be upset and to remember that when he votes.
I want to explain the Roth IRA to him. However, I am not
clear on the details:
- Max contributions
- penalty for early withdrawals
- excemptions to the penalty
Dick
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<< the purpose of avoiding penalties that may be imposed >>
<< upon the taxpayer. >>
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Posted by Arthur Kamlet on June 8, 2007, 1:22 pm
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> My youngest, Joshua the Mercenary, is now 16, has a part-time
> job. He is already cursing the IRS. With a smile on my face,
> I told him it is Congress, not the IRS, with whom he should
> be upset and to remember that when he votes.
>
> I want to explain the Roth IRA to him. However, I am not
> clear on the details:
> - Max contributions
> - penalty for early withdrawals
> - excemptions to the penalty
Kaye Thomas wrote a very easy to read and pretty complete
tutorial.
Click here http://fairmark.com/rothira/index.htm
and then start with the Roth 101 link.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Bill on June 8, 2007, 1:22 pm
Please log in for more thread options rdadams@smart.net (Dick=A0Adams) posted:
> My youngest, Joshua the Mercenary, is now
> 16, has a part-time job. He is already cursing
> the IRS. With a smile on my face, I told him it
> is Congress, not the IRS, with whom he
> should be upset and to remember that when
> he votes.
>
> I want to explain the Roth IRA to him.
> However, I am not clear on the details:
>
> - Max contributions
Currently $4,000 ($5,000 if age 50 or older). Of course,
emphasize they are _not_ deductible. The payoff comes much
later -- 43+ years, in his case; but WOW, think of the
compounding!
> - penalty for early withdrawals
The 10% additional tax applies to "unqualified"
distributions (e.g., excess contributions, early
distributions, etc.)
> - excemptions to the penalty
Most important exception is distributions that are a return
of your regular contributions -- which are not includable
"in your gross income."
There are other exceptions for a first-time homebuyer up to
$10,000 (lifetime limit) ... or for distributions because
you are disabled ... or in payments to a beneficiary after
one's death (like he'd care about that).
The major benefit of a Roth, of course, is that all
_Qualified Distributions_ are not taxable -- and the major
qualifier is the Roth has been open for 5 years, and the TP
is age 59 1/2.
Smart son. Pub 590 might be excellent bedtime reading --
good sleeping aid.
Bill
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by joetaxpayer on June 8, 2007, 1:22 pm
Please log in for more thread options Dick Adams wrote:
> My youngest, Joshua the Mercenary, is now 16, has a part-time
> job. He is already cursing the IRS. With a smile on my face,
> I told him it is Congress, not the IRS, with whom he should
> be upset and to remember that when he votes.
>
> I want to explain the Roth IRA to him. However, I am not
> clear on the details:
> - Max contributions
> - penalty for early withdrawals
> - exeptions to the penalty
$4K (because he is not 50) He can withdraw his deposit
without penalty, but earnings would be taxed and 10% penalty
if he's under 59-1/2
More important, teach him the 'rule of 72'. At 10%, money doubles in 7
years. From now till 66, this money can potentially double 7 times. 2^7
is 128. His $4000 can grow to over $500,000. Ok, this ignores inflation.
It may 'only' be worth $128K.
Tell him if he puts the $4000 away each year for 8 years, he will be
ahead of the friend who starts at 24 and puts away $4000 every year for
the rest of his life.
JOE
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by A.G. Kalman on June 8, 2007, 1:22 pm
Please log in for more thread options Dick Adams wrote:
> My youngest, Joshua the Mercenary, is now 16, has a part-time
> job. He is already cursing the IRS. With a smile on my face,
> I told him it is Congress, not the IRS, with whom he should
> be upset and to remember that when he votes.
>
> I want to explain the Roth IRA to him. However, I am not
> clear on the details:
> - Max contributions
> - penalty for early withdrawals
> - excemptions to the penalty
Everything you need to know about Roth IRAs from Kaye Thomas:
http://www.fairmark.com/rothira/index.htm
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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